JBS delays but does not give up on U.S. IPO plan

Sao Paulo | Reuters — JBS SA, the world’s largest meatpacker, has delayed but not ditched its plan to list a U.S. subsidiary this year despite a series of investigations targeting the company’s owners, CEO Wesley Batista said Tuesday.

A court last week ruled the CEO and his brother Joesley, fellow founder and current JBS chairman, cannot make major changes to the company until the end of a probe into allegedly fraudulent loans from development bank BNDES.

In a conference call, the CEO said the court ruling did not interfere with plans for acquisitions, divestments or an initial public offering (IPO), only deals altering the company’s controlling shareholder structure.

However, the CEO Batista said a separate scandal regarding the alleged bribery of health inspectors, which disrupted output and exports, had contributed to the delay of the U.S. IPO, which is no longer feasible by June.

“We will look for a window in the second half,” he said, adding that investors “have doubts in relation to what is going on.” His comments confirmed a Reuters report regarding a likely delay of the IPO amid lukewarm investor feedback.

The food safety probe contributed to weak first-quarter earnings reported late on Monday, which sent shares tumbling eight per cent in Tuesday trading, their biggest drop in two months.

The results at the JBS Mercosul unit were worse than local peers, Itau BBA analysts led by Antonio Barreto said in a research note on Tuesday.

A decision to stop reporting volume and price data per division also reduced visibility of results, Itau said as it downgraded JBS shares to “market perform.”

Though JBS made no provisions related to the “Weak Flesh” probe, the impact of the investigation will likely be felt in the second quarter, management said.

In April, JBS put workers on leave at 10 out of 36 cattle slaughtering units to reduce capacity after the investigation briefly disrupted exports to major global markets.

Internationally, JBS’s businesses include brands such as Swift, Friboi, Seara, Pilgrim’s Pride, Gold Kist Farms, Pierce, 1855, Primo and Beehive. Its Canadian assets include one of the country’s biggest beef packing plants, at Brooks, Alta.